The Journey towards an Agile HR Function

Agile working methods have been disrupting the technology world for the past 20 years. As such, they’ve created innovation in software development, improved numerous products and increased speed to market. Innovation methodologies have been part of the IT world as key capabilities to deliver value to customers while creating a new organizational culture.

Scrum, Kanban, Lean Startups, XP, Dev. Ops and Continuous Delivery are some of the agile methodologies that have been spreading across a broad range of markets and industries. They’ve contributed to a changing concept of teamwork, problem solving and management. When it comes to an agile HR function, the question is: Can HR implement an agile approach to become a customer-centered function that delivers value through agile solutions?

An Agile approach

Let’s start with a definition. What does agile mean? Agility is the ability to increase speed to market, create solutions to compete and meet new customer needs. It is not a reactive response to develop new organizational capabilities. Agility is a strategic approach to bring innovation, break functional silos and empower multidisciplinary teams to be self-managed with a customer-centric focus while accelerating profitable growth in the process.

In one sentence: Agile is all about constant innovation.

The agile approach has its foundations in the Agile Manifesto. This Manifesto consists of Twelve Principles and Four Values that are meant to provide guidance for any Agile methodology. The main idea is to aim for the development and delivery of high-quality, working software and to be able to provide a rapid and flexible response to change.

On the other hand, the Manifesto states that the customer is the focus of the work. Self-organizing and cross-functional teams are held accountable for the planning, the delivery of projects and the organization of work. But Agile is not just about software development, it’s an innovative approach to run organizations successfully.

Baba Prasad, CEO of the Vivékin Group, said there are 5 types of agility: analytical, operational, inventive, communicative, and visionary. We’ll briefly describe each one below.

Analytical agility is about the ability to use different kinds of analysis and quantitative approaches to find solutions.

When it comes to operational agility, organizations need to think about different ways of designing their value chain to go to the market.

Inventive agility is about different ways of generating and evaluating ideas. A transformative value will often emerge through experimentation – what do I need to do to put a product on the market?

Communicativeagility is about asking yourself whether or not you’re defining key messages for the markets that the company serves – how can we engage our customers?

Visionaryagility is all about the mindset and aspiring business leaders to encourage teams to discover unexpected, breakthrough ideas – what is the long-term thinking? How big is the impact?

The lesson to be learned here?

HR can use this approach to design and reinvent practices.

In the article “Embracing Agile” by Harvard Business Review, the authors talk about how the spread of agile raises intriguing possibilities: “What if a company could achieve positive returns with 50% more of its new-product introductions? What if marketing programs could generate 40% more customer inquiries? What if human resources could recruit 60% more of its highest-priority targets? What if twice as many workers were emotionally engaged in their jobs? Agile has brought these levels of improvement to IT. The opportunity in other parts of the company is substantial.”

In short, this is the message for HR: We are entering the age of Agile. Therefore the focus for HR should be on:

HR needs to capitalize agile’s potential to help organizations win in a very dynamic market environment.

Agile Focus in HR

In another article, “How HR can become Agile” by Harvard Business Review, the author makes an interesting observation: “With agile processes and new technology permeating every corner of our organizations, there is surprisingly little published knowledge about how to integrate HR and other crucial supporting functions into the product development process or how to increase the agility in the ways they work. Agile espouses short cycles, regular reflection, and course correction based on evidence collected during the software production process. Yet HR regularly works in annual (or, at best, quarterly) cycles”

This is the main challenge for HR.

The majority of HR processes related to compensation (merit increase), performance appraisals, engagement surveys, workforce and succession planning are designed on a yearly basis. Many HR functions still operate like they did back in the 90’s; using talent practices that cannot meet the technological and customer demands of a digital world that is creating a very dynamic market environment. HR should be more than an operational-executor parent.

Over the past 30 years, HR has been supporting a different business environment and organizations that for the most part were static machines—big and efficient, but slow and complex at the same time; difficult to drive them into a new direction. One where they make fast decisions to design solutions that meet customer needs.

Furthermore, innovation was a capability that was focused on specific task force teams or functions. It wasn’t something that was implemented as a part of the DNA of organization nor as a competitive advantage.

Companies need to respond with nimble methods to meet their customer’s expectations, creating products and services that enable a customer experience that drives long-term growth.

People analytics, technology, and customer-centric methods allow organizations to move from a hierarchical structure to network organizations. In a network organization, decisions are made by cross-functional teams (who are accountable for the results). There is interactive feedback, task-centered “sprints” and a culture that rewards innovation, decision-making, and empowerment.

Agile HR: Approach to follow

Having all the tools and methodologies available, it’s time for HR to focus on the following 4 factors:

1. People over processes and tools

For HR, this is related to the Employee Experience. Global trends are changing the workplace and organizations. HR needs to partner with Marketing, IT and Operations to set up cross-functional teams to design an employee experience that’s linked to value.

Technology, demographic shifts, an augmented workforce and artificial intelligence are challenging HR to understand that “one size doesn’t fit all anymore”. It is necessary to customize jobs, performance practices, learning and career paths. People behave and learn in a different way. Therefore it’s the responsibility of HR to create practices/experiences that impact our people and customer experience.

This way HR is building a brand-new value proposition to acquire—and retain—the best talent. For example, an employee segmentation, using people analytics, will allow HR to understand the characteristics, behaviors and needs to design different compensation plans, learning contents, and customized work-schedules. The message here is: in order to deliver solutions with a competitive advantage, personalization and speed are top Agile priorities for HR.

2. Working prototypes over excessive documentation

Agile in HR is also related to innovation, the capacity of HR to move from a reacting approach to a thinking- ahead approach. Just like for example Apple did with the iPhone, Amazon with Alexa and Starbucks with new flavors of coffee – creating new markets and business opportunities. Those companies delivered new concepts with clear objectives, they surprise and engage their customers once they’ve experienced the value of it. The product itself created the demand.

The question here is: Why can’t HR do exactly the same?

Instead of waiting to execute projects or programs, HR can boost a mindset shift where it can prototype solutions focused on serving customers. This is a great opportunity for HR to use practical tools to deliver solutions. Instead of using the traditional Waterfall project management approach, HR can use Design Thinking. To “Empathize” and learn about its internal customer needs in order to “Define” the problem and “Ideate” some initial options to “Prototype” solutions and “Testing”. Start in small groups/ functions and learn from experimentation and feedback.

3. Respond to change rather than follow a plan

Agile HR organizations reimagine both whom they create value for, and how they do so. They are customer-centric and seek to meet diverse organizational and talent needs across the entire employee experience cycle. They are committed to creating value with – and for a wide range of – stakeholders (employees, investors, and communities). Therefore they work with multifunctional teams to bring solutions linked to strategy.

To deliver value, it is necessary to prepare the organization for change. A new business strategy will require a brand-new culture, different behaviors, skills, and structure. It also requires an HR function that can facilitate this (transformational) change in order to reduce resistance, align the organization and communicate the necessary changes across stakeholders.

HR with its “people expertise” can guide the organizational change readiness process and identify changes related to people, technology, process, and structure. Furthermore, knowing about performance and people skills can advise leadership teams to set up the change network and identify key players responsible to lead the change in their functions, regions and/or countries

4. Customer collaboration over rigid contracts

How would your customers describe their experience with your organization? Customers are becoming more digital and getting used to having the information in their hands. Nowadays they have a strong voice (social media) and access to more information on your competitors, new products, and new services available in the marketplace than ever before. Most customers won’t wait longer than 5 seconds for a web page to load. The way companies acquire, serve, and engage customers is changing due to artificial intelligence assistance like Alexa and Siri that can process a vast amount of data to understand consumer behaviors, habits, and preferences

So what’s the message for HR here?

Organizations will need to develop a stronger customer support function to design an excellent customer experience and achieve growth and profitability. This a great opportunity to create a culture of agility and innovation. One where new behaviors and values will need to be represented by leadership and align goals, technology, structure and talent linked to speed to market. This new culture should make everyone passionate about and obsessed with delivering a great customer experience.

Agile HR should be about creating incentives, compensation and recognition programs with a clear line of sight to engage customers. Work with legal and compliance to facilitate the process and to avoid roadblocks that will make the organization lose momentum.

Final Thoughts – How to get started

To understand what qualities are required to support an agile way of working, it’s essential to learn about Agile methodologies and their impact on organizations (benchmark).

To build an agile HR function, HR needs to embrace the same Agile principles as the business while acquiring new skills, top talent, more IT expertise and deeper knowledge about teams and network organizations.

Agile means being focused on short cycles, cross-functional teams, accountability, empowerment and a customer-centric approach to solve challenging problems. Yet HR regularly works in annual (or, at best, quarterly) cycles. Agile HR needs to focus on sprint HR solutions that are linked to business outcomes, culture and the work style of the organization.

Partner with IT, marketing and key business functions to set up an initial plan.

Use Design Thinking to assess your organization, to define the talent practice and design HR interventions.

Start with one practice at a time- it’s a long-term commitment- building it up practice by practice.

New practices have to be relevant to the business. Remember that each organization is different but the main focus is on a customer-centered orientation.

Train business leaders across your organization in agile methodologies. Agile teams need to be fully supported by business leaders to deliver sprint solutions.

Partner with the C-Suite to create engagement and sponsorship. The talent agenda is the responsibility of the CEO, but HR is the advisor and architect to design solutions linked to value.

Author: Alberto Loyola

Alberto Loyola is a Tech and AI HR Evangelist. His research and work focus on the future of work, AI, employee experience, the digitization of the workplace and the impact on HR. Alberto is the founder of Ignite Organizations, an HR tech & AI discussion forum and his work has been featured on different media.